On December 16, 2024, the Department of Labor (DOL) announced a rule to restore a regulation in place prior to the Biden administration related to tipped employees engaged in two different jobs for the same employer.

Under the Fair Labor Standards Act (FLSA), employers may pay “tipped employees” an amount below minimum wage if the employee makes up the deficit in tips. Tipped employees are those who regularly receive more than $30 per month in tips. Employers must pay a tipped worker at least $2.13 per hour. The FLSA then permits employers to take a tip credit up to $5.12 toward the minimum wage when paying any tipped employee. However, if there are not enough tips to make up the deficit (between $2.13 and minimum wage ($7.25)), the FLSA requires employers to pay the difference to ensure that the employee is paid at least minimum wage.

The DOL’s dual jobs regulation, as it has existed in various forms, is intended to help employers determine whether they can claim a tip credit for an employee. The regulation addresses the situation where an employee has two distinct occupations for the same employer and are tipped in one occupation, but not the other. The regulation points to the example of an employee working as a waiter and maintenance person in a hotel but is only in a tipped occupation when working as a waiter.

The 2021 Rule

Under the Biden administration, the DOL implemented a final rule in 2021, which provided that an employer may only take a credit for work performed by a tipped employee that is part of the employee’s tipped occupation. The rule focused on the tasks an employee performed during any given shift. The 2021 rule required a determination of whether the employee’s work fell into one of the following categories: 1) directly tip-producing work; 2) directly supporting work; or 3) work not part of the tipped occupation. Employers were allowed to take tip credits for the first two categories, but not the third category. The 2021 rule also imposed two additional requirements: an 80/20 requirement and a 30-minute rule. The 80/20 requirement required at least 80 percent of the employee’s work to be tip-producing in a given workweek. Relatedly, the 30-minute rule required employees to not spend more than 30 minutes of continuous time on work that directly supported their tip-producing work (category two). If the employee exceeded the 20 percent or 30-minute thresholds, the employer could not claim a tip credit for the excess time that week.

In October 2024, the Fifth Circuit vacated the DOL’s 2021 rule. The Court determined that the requirements of the FLSA are much simpler than the DOL’s 2021 rule. The law only requires that a tipped employee be employed in a job that customarily receives more than $30 a month in tips. The Court further stated that making the distinction between specific tasks related to a tipped occupation was unnecessary, and the statute does not require the employer to look at the time spent on each specific task and decide on that basis whether employers may take a tip credit.

The Current Dual Jobs Regulation Rule

Following the Fifth Circuit’s decision, the DOL amended its dual jobs rule to reinstate the rule that pre-dated the Biden administration. The final rule, published on December 17, 2024, provides that in situations where employees have dual jobs, such as maintenance person and waiter, they are a tipped employee only with respect to their employment in the tipped occupation (waiter) if they regularly make the $30 a month in tips for their work as a waiter. The employer may take a tip credit for that employees’ hours with respect to their employment as a waiter, but no tip credit may be taken for employment in an occupation of a maintenance person. Unlike the 2021 rule, the reinstated 2024 rule does not impose time limits on the amount of work that is not directly tip-producing while the employee is working in the tip-generating role.

Under either rule, determining whether employees meet the condition to claim a tip credit can be a headache. Accordingly, one option is to pay tipped employees minimum wage, regardless of tips received for the week, which can help avoid that headache.

For questions regarding the dual jobs regulation, please reach out to Jotionette L. Jones or any other member of Ice Miller’s Workplace Solutions team.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.